Manufacturing major benefactor of oil sands development, but more work needs to be done: Study

Extraction from Alberta's oil sands remains a key driver of economic growth and job creation across Canada, but more must be done to accelerate inter-provincial trade, according to a new report released today by Canadian Manufacturers & Exporters (CME) – Canada's largest trade and industry association.

The study found a strong link between capital exploration projects throughout the region and manufacturing. In 2009, cumulative capital investment in the oil sands, as well as maintenance repair and operations (MRO), totalled $23 billion – 20 per cent of which streamed directly to Canadian manufacturers. Of that share, however, two-thirds stayed within Alberta, while only 14 per cent went to Ontario-based companies, nine per cent to the Prairie Provinces, six per cent to Quebec, four per cent to B.C. and one per cent to Atlantic Canada.

"Above all else, this data shows the close correlation between oil sands development and its positive impact on both Canadian manufacturing and the economy as a whole," explains CME President & CEO, Jayson Myers. "But it also underscores the ongoing challenges and bottlenecks that threaten the ability of manufacturers outside Alberta to benefit from oil sands expansion. A big one is simply pipeline capacity. Companies won't invest if they can't reliably ship out product."

CME estimates nominal capital investment in the oil sands could climb as high as $905 billion through the end of 2030. MRO expenditures, meanwhile, could total another $912 billion. Currently, there are 49 projects online and another 178 either under construction, approved through the application process, or announced.

"Based on what we know about the state of inter-provincial supply chains, the types of manufacturing inputs required by oil sands producers, and the rate of new projects coming online, there is a significant opportunity for Canadian manufacturers to capitalize on a rapidly growing market demand here at home," says Myers. "They can't, however, sit back and wait. Manufacturers need to plan, invest and retool – and governments at all levels must provide the policies and support needed to make that happen."